Retail stores and other sellers often cannot "move" (sell) products as fast as desired. It is particularly difficult to sell aging products, since aging products may have become unfashionable, out of season, less useful or otherwise less desirable to customers. Retaining aging products occupies space needed for better selling products, and, even worse, can make other products appear unattractive by association.
If a product has not sold for a significant amount of time, or if it is otherwise desirable to quickly dispose of ("blow out") the product, a store typically sells the product to a consolidator or factory outlet at a fraction of the product cost. The expenses incurred in "blowing out" ("liquidating") a product include packaging, delivery and the loss to the seller for selling below cost. Accordingly, stores are averse to blowing out aging products, and instead prefer to sell aging products to customers.
In order to facilitate the sale of aging products without suffering the adverse effects of blowing out those products, stores often must lower the list prices (displayed prices) of those products to entice customers to purchase them. Unfortunately, lowering a list price of a product results in a lower profit, and possibly even a loss, on each sale of that product. Lowered prices may also make other, related products appear unduly expensive by comparison, thereby decreasing sales of those related products. Accordingly, it is desirable to sell aging products as quickly as possible. In addition, it would also be desirable to minimize or eliminate the publishing of lower list prices.
However, even lowering list prices does not move products until customers become aware of the lower prices. Customers may not become aware of the new prices until they visit the seller. Advertising new prices may increase customer awareness of new prices, but advertising is costly. Accordingly, lowering list prices does not allow a seller to accurately manage the timing and number of sales of aging products.
Lowering list prices can be even more costly to catalog merchants. A catalog merchant publishes catalogs of products and corresponding prices, and distributes the catalogs to potential customers. A catalog merchant typically prints several versions of each catalog in advance, each version having anticipated product prices during the course of a season or year. Each version is distributed at a different time, for example, a new catalog every month, in order to inform potential customers of the new prices. Accordingly, the catalog merchant often must establish prices well in advance of when those prices will become effective.
Because the different versions of the catalog are often printed well before the corresponding product prices are effective, the catalog merchant may have to reprint a new version if it is desirable to deviate from the pre-established prices. Such a deviation may arise in response to unanticipated conditions. For example, the catalog merchant may lower list prices of a product in response to a similar, unanticipated price reduction by a competitor. If the catalog merchant lowers list prices, it must either (i) incur substantial expenses reprinting and redistributing catalogs, or (ii) forego advertising the new, list prices, and thereby forego most of the benefits of lowering those prices. Accordingly, catalog merchants typically cannot respond easily to unanticipated conditions that affect product prices.
Some stores offer "tiered" prices, in which a series of subsequently lower prices for a product take effect over correspondingly subsequent periods of time. For example, a product price might be $100.00 during January (a first tier), $80.00 during February (a second tier) and $70.00 thereafter (a third tier). Tiered prices do not allow a seller to sell a product rapidly, for example, if there is a sudden need to clear old products to make space for new products. On the contrary, tiered prices tend to discourage customers from returning until the lowered prices are in effect. For example, customers willing to pay only the third tier price would not return until that price was in effect.
Tiered prices represent an attempt to predict demand for a product during different periods of time. However, like most conventional pricing schemes, tiered prices do not allow a seller to anticipate prices that customers are willing to pay until after the customers actually make purchases. Consequently, when a seller sets a tier price in order to sell the product quickly, the seller may inadvertently set the tier price too low, and make less profit than was attainable. Conversely, a seller may inadvertently set the tier price too high, and thus fail to move the product as quickly as desired.
In addition, tiered prices do not produce commitments to purchase products at any particular price or time. Customers may or may not return to visit the seller during the periods of future tiers. Thus, tiered prices do not allow a seller to accurately manage the timing or number of sales of products.
It is particularly difficult to coordinate the sale of aging products between a group of related stores, such as a chain of franchisees. One store may have difficulty selling a product, while another store has customers waiting to buy that same product. To the best of applicants' knowledge, no effective system exists for managing this disparity between supply and demand at related stores. Accordingly, aging products may not be sold to the waiting customers as rapidly as desirable, if at all.
It would be advantageous to provide methods and apparatus for managing the sale of aging products. Ideally, such methods and apparatus would allow stores to abate or overcome the above-described disadvantages.